Jumping The S-Curve: How I Did It – And How You Can, Too
Amedisys, a Baton Rouge, LA-based home health and hospice care company focused on bringing home care to more than 35,000, faced its toughest challenge in 1997 after 15 years since its creation. It even came within a hair of declaring bankruptcy. Its CEO Bill Borne expands on how he and his team overcame a challenge familiar to many young firms—how to beat the growth cycle when the firm hits the top end of the “S” curve where it’s difficult to move forward and impossible to stay where you are.
July 11 2013 by Bill Borne
Despite the challenge, we’ve survived and flourished, growing into the nation’s largest organization for health care at home. And that’s because we’ve twice performed a feat known as “jumping the S-curve.”
In the recent book, “Jumping the S-Curve – How to Beat the Growth Cycle, Get on Top, and Stay on Top,” Accenture executives Paul Nunes and Tim Breene described how certain leading companies consistently elevate themselves – in effect, jump — to progressively high levels of achievement. By jumping the S-curve, for example, Procter & Gamble, UPS and Porsche, among others, routinely outperform the competition over the long haul, thriving rather than petering out.
As it happens, most successful businesses follow a life cycle pattern known as an S-curve. They start small, taking on a few eager customers, then grow fast, even exponentially, and then hit a peak, saturating a market, and level off. Such progress and decline – modest, shallow growth accelerating rapidly until maxing out and tapering off – takes the shape of a series of curves that ultimately forms an “S.”
Nunes and Breene found that what matters is not just what you do to reach the top of one successful business (climbing your current “S-curve”). Many companies will succeed once. Equally important are the counterintuitive moves one must make early on the way up to prepare for the move to the next business (making the jump to your future “S-curve”). In Jumping the S-Curve, Nunes and Breene reveal the crucial insights for making such transitions, including: (1) Why traditional strategic planning won’t allow you to find the “big enough” market insights that are critical to superior performance, (2) Why your top team must be refreshed before performance starts to wane, and (3) Why you need much more talent than you think, especially “serious talent” that will find you worthy of their time
Amedisys first jumped the “S-curve” between our founding in 1982 and 1997. We started out as a staffing company, but then ventured into other services, such as surgery centers and post-acute care. We grew fast, with 300 facilities and 413 employees in eight states by 1995. So far, so good.
Then, in 1997, all hell broke loose. President Clinton signed the Balanced Budget Act, a new fixed-payment system that cut home health reimbursement retroactively by a whopping 50%. Overnight, the industry changed. As a result, our growth – and that of the industry itself – declined dramatically, and by 1998, with my back up against a wall, I considered filing for bankruptcy.
The crisis forced me to rethink our business model. I believed, for example, that we should focus exclusively on health care at home with a special focus on disease management for our aging population. That meant a drastic move – we would sell off our staffing division, surgery centers and physician services business.
I also believed that the White House cuts would drive many home health agencies out of business. In our new, more streamlined reincarnation, and operating in a less cluttered market, my thinking went, we would deliver home health care quicker, cheaper and more effectively than our competitors – and show strong profits in the bargain.
I made my case to our leadership team and board of directors, all of whom ultimately agreed with my strategy. Over the next two years, one-third of all home care agencies shut down while we were able to build our business.
Over the next 10 years, we ascended anew, primarily through acquisitions and adding hospice services to our offerings. In 2004, Forbes magazine named me Entrepreneur of the Year; BusinessWeek ranked us as a top performing company; and Investor’s Business Daily ranked us fourth on its list of Top 100 stock performing companies in the nation. By 2008, we had 325 home health care centers and 29 hospice care centers in 30 states. We had reached the peak of our second S-curve.
Now, as the Affordable Care Act takes effect – and as the health care system continues to strain under the demands of a growing senior population that is living longer and sicker than any in history — we’re preparing to jump the S-curve yet a third time. The ACA has opened the doors to new, more collaborative and innovative health care delivery models including accountable care organizations and bundled payments – giving us the opportunity to expand our role in the health care ecosystem as a critical post-acute care partner.
How do we plan to do it? The key will be for us once again to capitalize on what we call inflection points, otherwise known as pivotal moments in history that can make or break you. In those business life moments, you have to come up with a Big Enough Market Insight, or BEMI (case in point: in 1998 we decided to divest ourselves of certain divisions and consolidate our focus on home health). Leveraging our BEMI also means carrying out a plan rightly regarded as disruptive, perhaps better characterized as reinventing our company through innovation and adopting a new clinical and operating model.
I know: easier said than done. Truth be told, our company has bucked the odds. The failure rate for businesses after two years is 30% — and after 15 years it’s more like 75%. But jumping the S-curve can be done – we’re proof – Amedisys has been around for 31 years. In the end, it takes some spring in your legs and, above all, a leap of imagination.
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Bill Borne is founder, chairman and chief executive of Amedisys.